Zumiez Inc.

Good afternoon, ladies and gentlemen, and welcome to the Zoom As Inc. second quarter fiscal 2023 earnings conference call. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session toward the end of this conference. Before we begin, I'd like to remind everyone of the company's safe harbor language. Today's conference call includes comments including Zoom As Inc.' 's business outlook and contains forward-looking statements. These forward-looking statements and all other statements that may be made on this call that are not based on historical facts are subject to risk and uncertainty. Actual results may differ materially. Additional information concerning a number of factors that could cause actual results to differ materially from the information that will be discussed is available in Zoom S filings with the SEC. At this time, I would like to turn the call over to Rick Brooks, Chief Executive Officer. Mr. Brooks, the floor is yours.

Hello everyone and thank you for joining us on the call. With me today is Chris Work, our Chief Financial Officer. I'll begin today's call with a few remarks about the second quarter and the start of the back to school season before handing the call to Chris who will take you through the financials and some thoughts on the third quarter and the rest of the year. After that, we'll open up the call to your questions. As you forecasted back in May, our results have continued to track below prior year levels. That said, our second quarter sales improved from the previous quarter trend line and finished ahead of our guidance. The operating environment in the U.S. remains challenging with significant multi-year inflationary impacts weighing on consumer discretionary spending, continued competition with spending on travel and experiences, and higher levels of discounting to clear excess inventories. While this backdrop does not set up well for our full price selling model, we know from experience that these down cycles are temporary. and our focus is on best positioning the business to capitalize on market conditions as market conditions improve. This means staying close to our customers, adjusting our assortments to ensure we have diverse and differentiated merchandise they seek, and providing the world-class customer service they've come to expect from us. While we're not where we want to be from a results perspective, we made progress in the second quarter, and the work we've done this year against the plan we outlined in our earnings call in March has positioned the business for further improvement in the second half of 2023. The sequential moderation on our sales trend in Q2 has continued in the third quarter as we move into the back-to-school season and higher volumes. Through Labor Day, third quarter to date sales are down 7.7%, compared with down 11.6% in Q2 and 17.1% in Q1. Given that back to school has historically been a good indicator for holiday demand, we're optimistic about continued improvement in the business through the peak selling periods this coming holiday season. It's a tough first half, but I'm confident that by staying the course, we will emerge from this turbulent period even stronger. This means being diligent with our spending, focusing on the strategic investments that we believe will create significant long-term benefit for our customers and our shareholders while managing carefully in the short term what we can control. Some of the long-term strategic investments we believe are important to push forward include continuing investment in our people through best-in-class training and mentoring, optimizing trade area performance by ensuring that we have the right number of stores to serve our customers in each market, and getting the right product in the right places to serve them as quickly as possible. Continuing to work with brands to increase speed and flexibility while increasing margins. Investing in innovative approaches to generate human-to-human connections with our customers and engage with them in new ways that enhance the shopping experience. Continue our international expansion with a focus on Europe and Australia. We know that brands emerge locally and grow globally, and our international presence provides us opportunity to better serve both our customers and our brand partners. While we continue to optimize these operations with many of the initiatives we have proven across North America. We feel good about the progress we made internationally this year. We'll first have comparable sales in our other international businesses increasing 8% and total sales increasing over 14%. Before I turn the call to Chris, I would like to thank everyone in our organization for the continued hard work and dedication. You're the foundation of our unique culture and the reason I'm certain that Zumi's history of delivering long-term value for its shareholders will continue for years to come. With that, Chris will now discuss the financials.

Thanks, Rick. Good afternoon, everyone. I'm going to start with a review of our second quarter results. I'll then provide an update on our third quarter to date sales trends before providing some perspective on how we're thinking about the full year. Second quarter net sales were $194.4 million, down 11.6% from $220 million in the second quarter of 2022. Comparable sales were down 13% for the quarter. The decrease in sales was primarily driven by our North America business, offset by more favorable results for our other international business. During the quarter, we continued to see softer sales, primarily driven by ongoing inflationary pressure, increased competition for discretionary spending, and higher levels of discounting in the market. From a regional perspective, North American net sales were $159.7 million, a decrease of 15.9% from 2022. Other international net sales, which consists of Europe and Australia, were $34.8 million, up 15.5% from last year. Excluding the impact of foreign currency translation, North American net sales increased 15.7%, and other international net sales increased 11.8% compared with 2022. Comparable sales for North America were down 15.8%, and comparable sales for other international were up 3.7% for the quarter. From a category perspective, all categories were down in comparable sales from the prior year, during the quarter with hard goods being our most negative, followed by footwear, accessories, women's and men's. Total dollars per transaction were up for the quarter driven by an increase in average unit retail, partially offset by a decrease in units per transaction. Second quarter gross profit was $61.7 million compared to $75.1 million in the second quarter of last year. Gross profit as a percentage of sales was 31.7% for the quarter compared with 34.1% in the second quarter of 2022. The 240 basis point decrease in gross margin was primarily driven by lower sales in the quarter, driving deleverage in our fixed costs. The key areas driving this change were as follows. Store occupancy costs deleveraged by 210 basis points on lower sales volumes. Product margins decreased by 70 basis points. And buying and private label costs deleveraged by 20 basis points. These decreases to gross margin were partially offset by a decrease of 30 basis points in web shipping costs and 30 basis point decrease in inventory shrinkage. SG&A expense was $72.2 million, or 37.1% of net sales in the second quarter, compared to $70.1 million, or 31.8% of net sales a year ago. The 530 basis point increase in SG&A expenses as a percent of net sales was driven by the following. 210 basis point increase due to both deleverage of store wages on lower sales, as well as increases in wage rates that could not be offset by hours reduction. 160 basis point increase due to deleverage of non- wage store operating costs, 80 basis point increase in non-store wages, and a 60 basis point increase in training and events due to event timing. Operating loss in the second quarter of 2023 was $10.5 million or 5.4% of net sales compared with operating profit of $5 million or 2.3% of net sales last year. Net loss for the second quarter was $8.5 million or 44 cents per share. This comparison net income of $3.1 million or 16 cents per diluted share for the second quarter of 2022. Our effective tax rate for the second quarter of 2023 was 8.5% benefit compared to 44.7% provision for income taxes in the year ago period. The decrease in our effective tax rate was primarily due to increase in net losses and allocation of those losses across the jurisdictions in which we operate. Turning to the balance sheet, the business ended the quarter in a strong financial position. We had cash and current marketable securities of $140 million as of July 29, 2023, compared to $166.2 million as of July 30, 2022. The $26.2 million increase in cash and current marketable securities over the trailing 12 months was driven primarily by capital expenditures of $27.3 million. As of July 29, 2023, we have no debt on the balance sheet and continue to maintain our full unused credit facilities. We ended the quarter with $156.7 million in inventory, up 3.7%, compared with $151.1 million last year. The inventory growth was driven primarily by store count increases in our international business, while the inventory in North America is down 3.5% from the prior year. On a constant currency basis, our inventory levels were up 2.3% from last year. Now to our third quarter to date results. Net sales for the 37-day period into September 4, 2023 decreased 7.7% compared to the same 37-day period in the prior year ended September 5, 2022. Comparable sales for the 37-day period into September 4, 2023 were down 8.6% from the comparable period in the prior year. From a regional perspective, net sales for our North America business for the 37-day period into September 4, 2023 decreased 10.1% over the comparable period last year, and other international business increased 14.7 versus last year. Excluding the impact of foreign currency translation, North American net sales decreased 9.9%, and other international net sales increased 8.5% compared with 2022. From a category perspective, the men's category had a positive comp for the 37-day period ended September 4, 2023, while all other categories were negative. Footwear was our most negative category, followed by women's, accessories, and hard goods. Total dollars per transaction were up for the period, driven by an increase in both average unit retail and units per transaction. With respect to our outlook for the third quarter of fiscal 2023, I want to remind everyone that formulating our guidance involves some inherent uncertainty and complexity in estimating sales, product margin, and earnings growth, given the variety of internal and external factors that impact our performance. Our Q3 to date results have continued to show incremental progress to the trends experienced in the first and second quarter, but are still trending below year-ago levels as consumer demand remains under pressure from the continued impact of high inflation on discretionary spending. With that in mind, we are planning total sales for the third quarter will be between $211 million and $216 million. We expect that our third quarter 2023 product margins will be down slightly from the third quarter of fiscal 2022 due primarily to the mix of sales year over year. Consolidated operating margins for the third quarter are expected to be between negative 1.5% and negative 2.5%, and we anticipate a loss of $0.15 to $0.25 per share. Similar to the first half, the decline in earnings is largely due to deleverage in the cost structure on lower sales base coupled with margin pressure. Our biggest areas of deleverage continue to be tied to fixed costs such as occupancy expense, base hours in our store that are driven by mall operating hours, fixed payroll costs across the business, and other corporate costs. As has been our practice this year, we are refraining from giving specific annual financial guidance due to the uncertainty and volatility in the macro environment, but do want to provide some context around how we currently believe the business will trend throughout the year. We have seen the trend line of sales results to prior year get stronger as we have moved through 2023, and I expect that to continue as we move through the back half of the year when compared to fiscal 2022 results. In fiscal 2022, product margins were down 50 basis points from the prior year after six consecutive years of growth. The majority of this year-over-year decrease was driven by our fourth quarter 2022 product margin, which was impacted by increased discounting as we worked to right-size inventory balance. We anticipated the front half of 2023 would also run down in product margin as we continue to work through aged inventory and the market remained promotional. For the first six months of fiscal 2023, margin decreased 70 basis points from the first half of 2022, which included the mixed impact of our international business, which has a lower product margin and is growing as a percentage of total sales. As we transitioned to the back half of the year, we believe that product margins could stabilize as inventories come in line and comparisons get easier. Our model is sensitive to sales fluctuations, and we have seen deleverage as sales decline in fiscal 2022 and also year-to-date in fiscal 2023, while the opposite was true in 2021 when we experienced record sales and operating margin driven by meaningful leverage. We continue to diligently manage expenses as we navigate this current environment and are positioned to take advantage when conditions improve. We have seen a reduction in our bottom line results during 2022 and 2023, creating significant variability in our consolidated tax rate. This is tied to the distribution of income across our current tax jurisdictions. Given this, we are expecting the tax expense could be an excess of pre-tax income for the full year. We are planning to open 19 new stores during the year, including approximately five stores in North America, 10 stores in Europe, and 4 stores in Australia. We expect capital expenditures for the full 2023 fiscal year to be between $19 million and $21 million compared to $26 million in 2022. We expect that depreciation and amortization, excluding non-cash lease expense, will be approximately $23 million. We are currently projecting our share count for the full year to be approximately 19.5 million diluted shares. With that, operator, we'd like to open the call up for questions.

Thank you. As a reminder, if you'd like to ask a question, please press star 11 on your telephone. As well, please be reminded to wait until you hear your name called before you proceed with your question. One moment while we compile the Q&A roster. Our first question for today will be coming from Mitch Comments of Seaport. Your line is open.

Yes, thanks for taking my questions. I've got three of them. Chris, on the sales guide, I think the range you gave that has sales down, I think it's, let's see here, 9% to 11%, and you're running better than that. quarter to date. So that obviously implies that you expect tougher results in the rest of September and into October. Could you maybe just address that? And I'm also curious, now that you're kind of post-peak back to school, have you seen some softening maybe in the weekly numbers since possibly kind of mid-August

Sure, Mitch. I'll try to take a crack at that. You're right. The guide that we gave is down 9 to 11, which is slightly worse than what our run rate has been. I think as we've You know, as we've worked through August and kind of the back-to-school season, I would tell you, you know, we are encouraged that our trend line has accelerated from where we were in Q2, but it was choppy. And I think it started a little softer. You know, weeks two and three were our best weeks, and then the last couple weeks have been a little bit softer. And, you know, we've looked at that a few different ways. Obviously, you know, the timing of when different markets go back to school have some pull on kind of what the overall results were. But we're also looking at it from a greater sense of knowing the need base to back-to-school shopping and where that's at. And our historical results would tell us that, you know, typically when you get out of peak, you'll see a little bit less demand. And so we're sort of buffering the current run rate for that under the assumption of just kind of where the market's at. And, you know, hopefully, as we try to do, it's a guidance that we can beat.

Okay. And then I know you're not providing specific guidance beyond 3Q, but you talked about kind of the improvement in the run rate. And when I look at the trajectory on your sales growth, you know, down 17, 1Q, down 12, 2Q, the midpoint of 3Q is down 10. You know, are you thinking that, you know, 4Q, you know, sales growth lands somewhere kind of in the, you know, I don't know, upper mid to lower high single digit negative range. Is that kind of, you know, the trajectory that you think the business is on?

Yeah, I'm going to stay away from giving specific fourth quarter guidance. I think what I would say is this, you know, as we look at Q4, we've historically been able to take a lot away from back to school, kind of in the trends of the business and what we've seen happening. And I'll tell you, even though this is a softer back to school for us, We look back at the quarter to date and what we've learned, and I think it would continue to tell us that we have a good trend line going into Q4. So as we think about the sequential sales improvement from Q3 to Q4, We're currently planning Q4 to be much stronger than what we've seen from Q1 to Q2, and now from Q2 to the Q3 guidance that we've given. So we do expect this trend line to improve. Those beliefs are based on a few things. First, I think our continued ability to drive stronger results. I think as we kind of break down back to school, further. We're really encouraged, you know, men's is our largest category, 50% of the business was our best performing category in Q2, and then turned positive during back to school. When we view that as a really good indicator for where the business is at, I mean, Mitch, you followed the company for some time. I mean, if we look back at 08 and 09, and kind of how we climbed out of those times and even 2015 and 16, which were softer for us, men's was a huge catalyst for that. So I think we're really encouraged by that. We're encouraged by what we saw from the customer during the period. I mean, transactions was our problem during back to school. We saw increased AUR and actually units when the consumer was shopping, which I think was another good turn for that we saw in the back-to-school season. So that gives us some confidence heading in. And then obviously, as we think about just the compares and how we move into the fourth quarter, Q4 of 2022 was our softest compare to really historical kind of pre-pandemic results. And so we do believe that some of the bigger drags on the business that have been more challenged around footwear and hard goods, they just soften as we get into the fourth quarter. So I think that gives us some comfort that we could see a good incremental step up in the fourth quarter. And obviously, you know, not giving guidance at this time, but we'll get more honed in on that here when we report at the end of November.

All right. That's helpful, Culler. I appreciate that. And then lastly, just on the SG&A, especially thinking about it from a dollar standpoint. So SG&A dollars were up 2 million in 2Q versus last year. That follows, I think, four consecutive quarters where the dollar SG&A was actually down year over year. So how are you thinking about that in 3Q, like from a dollar standpoint? And is there sort of a run rate to kind of think about SG&A dollars going forward? Like, you know, I know you're not giving 4Q guys, so you probably don't want to talk about next year, but Like, should we be thinking about SG&A dollars higher next year than this year? Or is there a chance that you can actually take that down just from like a cost-cutting standpoint? So I guess a couple of questions there.

Yeah, yeah, there's quite a bit there. So what I'll try to do is kind of talk high level about how we think about SG&A and then obviously how it pertains to where we're at today. So, you know, as I think about SG&A, you know, we have a highly fixed business, you know, fixed costs both within the store system as well as our corporate overhead and web and things like that. So, you know, this has created some challenges, as you know, in 2022 and 2023 of just the with the sales coming down, the deleverage in the business, you know, also is part of the reason we were able to leverage so well in 2021 when we saw increased sales. I think, you know, as we look at 2022 SG&A, and I do think sometimes it's important to step back and look at full year SG&A, you know, it was up 1.8% compared to 2021, or I'm sorry, down 1.8% compared to 2021. And it was up 4.6% compared to 2019, which you know, as we look back and we looked at inflation and where the cost structures had gone over that time period, I think we saw that as, you know, being fairly positive. As we looked at the first six months of this year, SG&A was up about 0.6%. So I think, again, we're feeling pretty good. The Q3 guide includes a little higher run rate, which is really around some timing of spend things. And, you know, we are continuing to invest in the business. I think That's an important distinction for where we're at. Obviously our results are tougher, but we do continue to believe there's good value long-term in investing through these cycles. We've built a really strong balance sheet. I think we're in a good financial position. That being said, we're being very prudent about how we think about it, too. To your point, managing fixed costs everywhere is possible. I think we're really rethinking our store payroll model and where we have hours there to try to pull back as much as possible and in certain departments and areas of the business, leaving open positions open. I think those are all things that we've looked at while trying not to cut things that are long-term for the business. I think as we look forward, what you should expect from us is we've got to grow sales at a much greater factor than SG&A. And because we have not done tons of substantial cuts to SG&A, I think we still feel like we've got the right balance to be able to drive sales going forward. So that's really our focus. That will be our drive as we move into 2024. And I think as we look at SG&A overall for 2023, we won't see huge growth. What we'll see is some of the inflationary pressures that are really hitting lots of people in the industry.

Okay. Thanks again.

Thank you. One moment while we prepare for the next question. And we have our next question will be coming from Jeff VanCender of B. Riley. Your line is open.

Yes. Hi, everyone. I wonder if you guys could talk a little bit about what you're seeing in the sales and margin performance of your private label product.

Yeah. I'll go ahead and talk about it just kind of from a numbers perspective, and obviously welcome Rick to chime in. I think one of the things we've talked about throughout this year is our consumer really seeking value, and I think we've seen that out in the external market. It's surely been clear in our business, too. Private label as a percent of the business has continued to climb. We've seen it from 2022, throughout 2022, and now into the first quarter and second quarter this year. And then pretty substantially here in the third quarter to date, which you'd expect in back to school and where we're at. And I think we're really, you know, we are really proud of our teams and how they've executed here because we While there's certainly a value play here, I think our teams have also done a really good job bringing great product to market. So we've seen that really resonate both in our tops and bottoms business areas. But, you know, in other areas as well, but that's the primary drivers on the apparel side. So overall, I think seeing really good private label trends, I think we've been able to do some things with bundling and packages in our stores related to private label as well, which has been beneficial and we're also seeing the growth internationally too. And so we're encouraged by that with some of the brands really working in Europe and our Fast Times in Australia team also has some private label that they're pushing as well. So overall, I think we're pretty encouraged by what we're seeing in that area of the business.

And I'd only add, Jeff, that I think this, what Chris has just described is what's driving and the success of our bundling promotions is what's driving the the UPT gains. And that's where I'm so proud of our sales teams is that they're using that with our customers coming in the door. And we generated not only how we had the AUR gains continue, but we've seen, again, UPT start to increase in back-to-school, which is, I think, a credit to our team, our sales team, to put those bundles, to sell those bundles, and to have some of our highest now dollars per chance, I think, ever at back-to-school, which I think speaks well to how we're positioned with our core consumer.

Mm-hmm. That's helpful. Just as a follow-up to that, and I don't know, I'm not sure you really break this out often, but just wondering if there's any color you can give us in kind of where that concentration of private label is running at this point.

Yeah, I can speak to that. We are about 21.5% through the second quarter compared to about 17% last year. So it's about 450 basis point increase year over year as a penetration of total sales.

Okay, interesting. And then I have sort of an off-the-cuff question for you guys, but I'm just wondering how you're handling getting people back to the office at this point. I know that out there, you know, we hear some resistance. What's your latest policy to get folks back to the office?

We have steadfastly throughout the entire pandemic period and into where we're at today, Jeff, we've always considered ourselves to be a an office environment where people are going to be here. Of course, our store employees are in the office every day, as are our DC teams in the office every day down in our DC facility. So we believe that collaboration is key at Central so that throughout the pandemic, whatever the rules were, we definitely followed them. But if we could have 50% capacity, we were rotating everyone in 50-50 over alternating weeks. And so pretty much for us, everyone's back. Um, we have some exceptions for certain specific situations, but pretty much on the fall we've been back.

Okay. Good to hear. And then I have one more sort of broader question for you. Um, I think you were kind of running on average about an eight to 10% operating margin, uh, call it pre COVID. Um, but of course we have elevated labor expenses now and other inflationary inputs. What do you think is a normalized operating margin for the company? Are we looking now probably mid-single digit, do you think? Or just assuming sort of modest sales recovery, call it maybe a mid-single digit positive comp, all else being roughly equal? How do you think about that?

Yeah, I mean, you know, Jeff, we've done a lot of work around this. And obviously, the step back we've had the last couple years has been super challenging. But You know, as we break it down, we've broken down lots of different ways. I really believe it's generally sales-related, and this is the bigger challenge in our business. And, you know, we actually, you know, coming out of 14 and 15, we had talked about getting back to high single digits from an operating profit perspective. We were able to accomplish that. We actually got into double digits. And I think we still believe over the long term if we can get sales right, And there are other things in the business that help offset some of the inflation. We've been able to drive product margin higher. We have an international business that still has a lot of growth around it. I think that high single-digit goal is still achievable. And that's really our push. And that's our drive as we think about the business recovering and seeing the sales come back is trying to build a model that will get to that high single digits and, you know, obviously, hopefully, potentially beyond. but I think that still seems realistic in our heads. Okay.

Thanks for taking my questions, and best of luck in the remainder of Q3. Yep.

Thanks, Jeff.

Thank you. If you would like to ask a question, please press star 11 on your telephone. One moment for the next question. The next question will be coming from Tori Turlow. Jeffrey, your line is open.

Great, thanks. I think you cited some encouraging trends in men's. I was wondering if there's anything into back to school or into the third quarter that has maybe surprised you from a category or fashion trend standpoint that you can talk about?

I'll start and let Chris add in, Corey. And I guess one of these we've already talked about, which is the strength of our private label business. And I think that is clearly a strong trend driven business. I think, as Chris said earlier, our teams have done a really good job here of being on trend and on cycle. And of course, we had to plan for that. This isn't in our most of these private label categories, like cut and sew categories. So this is something we planned for back to school, I think, executed well by our private label product teams, and then executed really well with our overall team strategy and the bundling that worked both in stores and online for providing value for our customers and driving DPTs in the process, as well as driving margin. The other area I'd call out for you, and so that's a big driver, and definitely for men's too. The other area I'd call out for you, I think that's important is, and I think exciting for us, is the emerging brands. And we feel very encouraged about our pipeline in emerging brands here in 2023 And we have seen sequential improvement month over month in terms of brands launched in 22 and 23, gaining share within our total sales mix. And that continued on into the back to school season. So that's the other aspect that that turned our printables business positive in back to school. So that if you want to look at the real driver behind men's, it's those getting positive for the back to school season. It's those two things, the quality of our of our on-trend private label product, the quality of our sales teams in selling multiple units, and combine that with newness on the brand side and dramatic improvement in our screenables business. And so I'm really, I think that's another area that's exciting for us as we think about this internally is we're hoping, of course, we can continue to see that month-over-month sequential growth and that these brands launch in 22 and 23 can continue to be growth drivers within the printable screenables areas of our business.

Great. Thanks. That's very helpful. And just on product margins, you gave some helpful color as to how they've trended over the last couple quarters. Could you maybe unpack for us how you're thinking about promotions ahead and how you think about product margins into the back half and how that might unfold as we head into holiday?

Sure. Yeah, you know, I just, as we think about product margin, we mentioned in our prepared comments we were down 70 basis points year to date. And what I would just add to that is obviously the mix component that we talked about is pretty significant. When you have an international business comping up and growing sales and obviously our domestic business is more challenged. and given that the international margin is quite substantially lower than our domestic margin. So even when we say down 70 basis points, the lion's share of that is really a mixed challenge versus actually product margin decline. So as we look forward, part of what we knew coming into this year is that we would have some product margin challenges. We had some inventory to clear out as of the end of last year, and we saw some of that even added into that 70 basis points down as we moved through inventory in the first half. Now, as we transition to the back half, we do think we have some some opportunity in product margin. Now, I think you'll be down slightly in the third quarter, again, tied to just mix and also tied to some clearing that we're doing specifically in the area of footwear. If I look at the inventory overall, we feel really good about where our aging sits with the exception of footwear. And I don't think that's a surprise to anyone. It's been pretty well talked about out there of some of the challenges of footwear across the market. And so we're not immune to that, but I think our teams have done a good job kind of working through it and clearing it. And so that will be one thing that we continue to have planned into the model. It's planned into the Q3 guidance and obviously any thoughts we've given for the year. That being said, you've also seen private label increases of percentage of sales. That's a benefit to us. We think we have the ability to continue to drive margin here domestically as well as internationally. And most of our initiatives on the product side are built around trying to do that in addition to sales. So I think as we move forward, we are hoping that we'll have some more opportunity against prior year product margin versus what we saw in the front half, even with the mixed shift that we've seen from where our sales are coming from.

Great. Thanks so much, and best of luck.

Thank you. That does conclude our Q&A session for today. I would like to turn the call back over to Rick Brooks, CEO, for closing remarks. Please go ahead.

All right. Thank you very much, everyone, for your time today. We greatly appreciate your interest in Zoomies, and we'll look forward to talking to you in late November about third quarter results and early reads on the holiday season. Thank you, everybody.

Thank you all for joining today's conference call. This does conclude today's call. You all may disconnect and have a great, wonderful day.